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63d Congress \ 
2d Session J 



SENATE 



/ Document 
\ No. 579 



MARKETING OF FARM PRODUCTS 



HEARING 



BEFORE THE 



ASSISTANT SECRETARY "OF COMMERCE 



RELATIVE TO 



THE MARKETING OF FARM PRODUCTS IN 
CONTINENTAL EUROPE 



WASHINGTON 

GOVERNMENT PRINTING OFFICE 

1914 






V 



In the Senate of the United States, 
September 5 {calendar day, September 12), 1914- 
Resolved, That the manuscript entitled "Marketing of farm prod- 
ucts/' by David Lubin, United States delegate to the International 
Institute of Agriculture, be printed as a Senate document. 
Attest: 

James M. Baker, 

Secretary. 
By H. M. Rose, 

Assistant Secretary. 
2 



Ui Or ^ 






MARKETING OF FARM PRODUCTS. 



FRIDAY, AUGUST 14, 1914. 

Present: Hon. Edwin F. Sweet, Assistant Secretary of Commerce; 
Hon. Albertus H. Baldwin, Chief Bureau of Foreign and Domestic 
Commerce; Hon. William J. Harris, Director of the Census; Mr. 
David Lubin, of California, delegate of the United States to the 
International Institute of Agriculture, Rome, Italy; Mr. George P. 
Hampton, of New York, representing certain State granges; Mr. 
Joseph D. Lewis, chief of division, Bureau of the Census; Mr. H. J. 
Zimmerman, in charge cotton statistics, Bureau of the Census; Mr. 
Arthur J. Hirsch, chief of division, Department of Agriculture; Mr. 
C. T. More, Office of Markets, Department of Agriculture; and Mr. 
G. C. White, Office of Markets, Department of Agriculture. 

STATEMENT OF MR. DAVID LUBIN, DELEGATE OF THE 
UNITED STATES TO THE INTERNATIONAL INSTITUTE 
OF AGRICULTURE, ROME, ITALY. 

The Assistant Secretary. I believe we are going to listen to some 
suggestions by Mr. Lubin on the subject of marketing farm products 
in continental Europe, to see what we can learn from their example. 

Mr. Lubin. We see in the papers this morning and last night the 
statement and wishes of the President in the matter of the undue 
rise in the price of food products, and the evil influences on the 
economic condition of the people resulting therefrom, and that he 
has asked the Department of Commerce to take this subject up in an 
investigation, with the end in view of finding an effective remedy. 

Believing that I had a tentative proposal in that direction to offer, 
I asked for this hearing. 

This inquiry, as it appears to me, offers the department the choice 
of one of three different modes of procedure — 

First. To merely make an investigation, and let the report go to 
the people; 

Second. To advocate the penalization of those supposedly re- 
sponsible for the evil complained of ; or, 

Third. The adoption of a working plan calculated to diminish 
the possibility of the cause which generates the evil. 

It was in the belief that this department is to be actuated by the 
third of these motives, that I asked for this hearing. I will now pro- 
ceed to submit my suggestion. Briefly, it is the adaptation and adop- 
tion in the United States of the European system of marketing farm 
products. 

I offer this as a remedy not merely to meet the temporary phase 
of economic disturbance said to be caused by the war, but also as a 
means of permanent economic betterment which it would afford long 



4 MARKETING OF FAEM PEODUCTS. 

after the war will have been forgotten; for the betterment I have in 
mind is of a permanent nature. And the question now remains, 
which of the three motives just enumerated is to actuate the depart- 
ment in this inquiry ? 

The Assistant Secretary. I think you can fairly assume that the 
latter one of the three is the purpose, Mr. Lubin. We want to do 
what we can for the betterment of the general conditions. 

Mr. Lubin. Well, then, it is in order for me to proceed, but before 
doing so I desire to state that Mr. Hampton, a coworker, is here with 
me, and that he represents some State granges. What granges do 
you represent, Mr. Hampton? 

Mr. Hampton. Pennsylvania, Kentucky, Nebraska, South Dakota, 
Colorado, Idaho, Washington, and Oregon. 

Mr. Lubin. I have been working in conjunction with Mr. Hampton 
and with Mr. Creasy. Mr. Creasy is the master of Pennsylvania 
State Grange, and when I leave Washington I am to present this 
subject before the executive committee of the Pennsylvania State 
Grange, but the presentation then will be modified in some essentials 
from that made here, the reason for which I will explain further on. 

The basic feature in the German system of marketing farm prod- 
ucts is its "Landwirtschaftsrat" (its national council of agriculture). 
This Landwirtschaftsrat is a semiofficial body, which, beginning in the 
township, the county, thence upward to the Province, culminates in 
the national organization of its 72 members, with its seat in Berlin. 
Its revenue for expenses is met by Government taxation of each 
farmer having a vote. It has the power (in a consultative and in an 
advisory manner) under Federal law of exercising the initiative and 
referendum on all laws that are being enacted, or that are up for dis- 
cussion in the Reichstag, which have a direct or an indirect bearing 
on the industry of agriculture, and it has the right to submit amend- 
ments or ask the repeal of existing laws bearing on the subject of that 
industry. Of course, this is only an advisory body, but it is quite 
clear to be seen from its operation that it is one of the most powerful 
political and economic boclies in Germany. Incidentally it also looks 
out for the thousand and one things that come under the head of 
promoting agriculture, such as buying, selling, production, distribu- 
tion, cooperative work, rural credits, etc. 

Now, the proposal that I will submit to this department does not 
embrace the taking up at this time of the Landwirtschftsrat; that 
will be done at some future time by the farmers themselves, but what 
I will offer right now is intended to serve as a substitute, and is of a 
temporary character, in order that the success which is to follow from 
the start may serve as a means to hasten on the adaptation and adop- 
tion of the European marketing system in its most approved and 
complete form. 

The Assistant Secretary. Would you object, Mr. Lubin, to our 
asking you a question once in a while as you go along ? 

Mr. Lubin. Not at all. 

The Assistant Secretary. I would like to ask you if the advis- 
ory power of this body is restricted to laws affecting farmers or land- 
owners ? 

Mr. Lubin. I think that it is confined to the things that apper- 
tain to agriculture, either directly or indirectly. The Landwirt- 
schaftsrat probably would not be consulted on matters foreign to 



MARKETING OF FAEM PRODUCTS. O 

agriculture. In short, what the chambers of commerce and the 
boards of trade are to commerce, that the Landwirtschaftsrat is to 
agriculture. 

In the United States we have no such body, but in place we have 
a miscellaneous assortment of bodies calling themselves ''national." 

Some of these, like poisonous mushrooms, spring up over night. 
They make a nice showing on paper, and their main ambition seems 
to be to sit "on the platform" and to be taken as the spokesmen of 
the American farmer. "As smoke to the eye, and as vinegar to the 
teeth," so are these "representatives." 

Then there are the so-called "national bodies," who represent 
unwieldy, incoherent masses mainly influenced by heterogeneous 
ideas, who seldom know what is to be done or what is not to be done. 

And when some of these national bodies are really composed of 
honest, earnest men, they are easily discredited and pushed to the 
wall by those who are not honest, earnest, or capable. 

The status of these "national" organizations reminds me of a story. 
The San Francisco Argonaut came out with a query, "What is a Popu- 
list?" It said: "It is a hard question; we will try to answer it next 
ssue." Of course everyone got ready to buy a copy of the Argonaut 
and see what a Populist was. The next issue it said: "We have got 
the answer. A Populist is a fellow that doesn't know what he wants, 

and he wants it d d quick." Now, that is about what our national 

farmers' organizations are. They want something awfully quick and 
don't know what they want. As a result, they get nothing. Now, in 
Germany the national agricultural organization is a great harmonious 
coherent institution, it is a breathing body — breathing from the 
head down to the feet and from the little township up to the head, up 
to the county ; still higher, the Province, and up until it takes its seat 
in Berlin as adviser of the imperial governing power of the nation; and 
that institution does a great deal for German agriculture and for the 
German nation. I would like to see a similar institution put into 
operation here. It is going to be put into operation, and, as I say, it 
may take two or three years' time; but the substitute that I propose 
at this meeting here is going to hurry up the Landwirtshaftsrat. It 
is not going to stand in its way at all. 

In order that we may grasp what this substitute means, I would like 
one of you gentlemen, who is a fair reader, to run through an article 
which i have here — not on this question of to-day. It only deals 
with it indirectly, it deals with the tobacco phase of the question; 
but it touches what I am trying to get at broadly. You have got to 
pick your way through it; but you gentlemen are skilled enough to 
know when to let go of the tobacco phase of the question and to take 
up the question as a whole. After you have heard this paper it will 
make it quite easy to understand the merits of my proposal, so if you 
will ask one of these gentlemen to read it i will be much obliged. 

(At the request of the Assistant Secretary, Mr. Baldwin read the 
paper, which is herewith attached.) 

Mr. Lubin. I beg pardon; I must explain. This paper was sent 
to Mr. Flood, who is chairman of the Foreign Affairs Committee. 
Now, several countries in Europe make a monopoly of the tobacco 
business. The Government is the tobacco buyer and seller. Every 
cigar that is sold, every piece of tobacco is owned by the Government 
and sold in the Government shops, etc. They have one buyer in 



6 MARKETING OF FARM PRODUCTS. 

these countries, and their mode of buying is uneconomical to the 
American producers. The American producers then formed a union 
for the selling of their tobacco, and then made a demand through the 
American ambassador to get the Italian " regie," or the royal monop- 
oly buyer, to pledge himself to buy exclusively from the union. The 
Italian "regie" buyer then made a pledge to the ambassador that he 
would do the best he knew how, but it did not work out well; so they 
sent another communication to Rome requesting the cooperation of 
the International Institute of Agriculture in the matter. Accord- 
ingly I went to the ambassador for instructions. He advised me to 
go and see the " regie" man again, and of course I could talk to him 
much more openly than the ambassador could. We had a talk, and 
finally he got me to hand in my request in writing, all of which will 
appear in that paper. It is in this paper that I sent to Mr. Flood, 
the chairman of the Foreign Affairs Committee, that I touch upon the 
question of marketing farm products. There is where the marketing 

Erocess will come in. Mr. Flood, whom I have seen since coming here, 
as handed this paper to the tobacco people. I wish to say, paren- 
thetically, that about eight years of my life were devoted to the pro- 
motion of the California fruit industry, and now the fruits of Cali- 
fornia, while the distribution is very much better than about 20 or 
25 years ago, is very much behind hand when compared to the 
European mode of marketing. 

To give us the perfected systems of distribution operating in Eu- 
rope we must, first of all, have the Landwirtschaf tsrat, and, secondly, 
a rational rural credit system, and I wish to say right here that there 
is no reason that I know of why we can not have the Landschaft 
rural credit system in the United States. There is no country in 
the world where money is cheaper than in the United States. My 
children in England deposit money in the postal savings bank and 
they receive either 3 or 3 \ per cent. In the United States they would 
only receive 2 per cent, so that money here is cheaper than anywhere 
else in the world, and Landschaft bonds, if properly devised, can be 
readily disposed of for 3, 3J, and 4 per cent, the same as in Europe, 
and that with amortization. But all this will have to be done ra- 
tionally, and there has got to be no trace of what we may call Pef- 
ferism, no Populism, in it. Government can not grind out unsecured 
money, nor buy rural credit bonds, nor advance money to farmers 
any more than for barbers or shoemakers. There is a way of start- 
ing a rural credit system rationally, and I propose to take that up 
very shortly, just as soon as the resolution now pending in Congress 
is acted upon, the resolution on merchant marine. What is this 
resolution % Is it a proposition about getting ships to carry our 
exports overseas during the continuance of this war ? It has noth- 
ing at all to do with the war, but it has much to do with the question 
of agriculture, the distribution of agriculture. It has to do with the 
question of the world's price of the staples, and it has to do with 
the home price of staples. Say, for instance, that the price of wheat 
in Liverpool is $1, in other words, the buyer there says, "I will give 
you a dollar per bushel for wheat." The producer in this country 
says, "Very good; give me the dollar, and I will give you the bushel 
of wheat," and the buyer in Liverpool says "All right; deliver it 
right here in my warehouse, and you may have the dollar." 



MARKETING OF FARM PRODUCTS. 7 

And so you see that a carrier is wanted to carry it over the sea, 
and now if it costs a cent a bushel for delivery from New York to 
Liverpool the American seller will receive 99 cents for the wheat, or 
1 cent deducted from the dollar. If it should cost 25 cents for deliv- 
ery from New York to Liverpool, it would only leave the New York 
seller 75 cents net a bushel. Seventy-five cents net for what ? Is it 
for the quantity exported ? Yes ; and, more than that, for the remain- 
ing quantity that is left in the home market. For the export price 
for the staples is the home price likewise, and right here we see there is 
a great difference between the price fixing mode of the staples and the 
price-fixing mode of the manufactures. The cost of carriage on 
neckties or shoes may advance or decline, but that cost of carriage 
will not increase or diminish the home or foreign price of all other 
neckties or shoes. But in the case of the staples of agriculture, inas- 
much as they are sold in the bourses, pits, or exchanges, which are 
practically the world's megaphones, speaking to one another; it thus 
follows that an increase or decrease in the cost of carriage has an imme- 
diate and direct effect in the home market and an indirect effect in 
the world's price. And this I tried to explain at the last joint meet- 
ing that we held on August 1 , between the representatives of the De- 
gartment of Agriculture and the Department of Commerce, when Mr. 
[arris, the Director of the Census, presided. You will remember, 
Mr. Harris, the illustration I gave; let me repeat it. We attach a 
hook in the ceiling and fasten a pulley on the hook, then pass a rope 
through this pulley and pass the two ends of the rope down on a line 
horizontal to our arms. We take one end of the rope in the left hand 
and let that represent the home market price of the staples of agricul- 
ture, and we grasp the other end of the rope in the right hand and call it 
the carrier, and then we do this [indicating]; in proportion as we 
raise the right hand, down will come the left hand, and as we press 
the right hand down, up will go the left hand. In other words, when 
you raise the cost of carriage you lower the home market price 
correspondingly, and when you reduce the cost of carriage you raise 
the home market price correspondingly. 

And so we see that if we give the carrier full play he has it in his 
power to raise and lower the home price at will, and in the matter of 
ocean carriage, if there is a combination of shipowners, they can raise 
and lower the world's prices at will; they can raise the price of car- 
riage and thus lower the cost of the product and then go into the pit 
and buy. They can then lower the cost of carriage and raise the 
price of the product correspondingly, and then sell. They can do 
this, and make so much money out of producer and consumer until 
they get tired gathering in money. They can not do this with raising 
and lowering the cost of carriage on neckties, shirts, typewriters, or 
desks, but they can do this on the staples of agriculture, because 
manufactured merchandise is transported at fixed rates, with 30 
or 60 days' notice of a change of rates, but the staples of agriculture 
have no fixed rates of carriage at all. The rates can be 1 cent a 
bushel one day and it can be 25 cents a bushel the next day. 

Now, you and I know that a buyer of manufactured goods must 
figure it all out in buying, the charge at the place of sale, the cost of 
carriage to lay the goods down. Without such calculation he could 
not rationally buy. Now, then, how is a man to buy the staples of 
agriculture or how is the producer to sell it ? What is the basis for 



8 MARKETING OF FARM PRODUCTS. 

their calculation ? Since the cost of carriage is an unknown factor, 
how is the price to be arrived at? We are driven to the conclusion 
that there is no rational way of arriving at what the price should be. 
There is a rational way for buying and selling merchandise, for the 
cost of carriage of merchandise is fixed with 30 or 60 days' notice 
for any change. But in the case of staples of agriculture there can 
be no basis for calculation so long as the cost of carriage may vary 
from day to day and from hour to hour. 

"Give us this day our daily bread," and the good Lord gives us 
this bread, but a lot of irresponsible shipowners come along, and by 
arbitrarily changing the rates of ocean carriage from day to day, and 
from hour to hour — by doing this, they put a measuring rod on the 
bread, which in substance is the same as saying, "The good Lord 
gives you the bread all right, but we, the shipowners, shall determine 
for you what the size of that loaf shall be," and when the shipowners 
have that power they have more power than presidents, emperors, 
czars, kings, or princes, upon this earth, and that is too great a power 
to have. They should have no such power; it does not fit in with the 
twentieth century. It is not sensible; it is not just; it is not right; 
and it should stop and stop for good. 

And mark you, it is insufficient to stop it for one country alone. 
During all the centuries there has been a great deal of laughing at 
the men who preach the doctrine of holding out our hands to a 
fellow man, to our neighbor, to our brother, and the world considered 
that a joke. It just happens that it is no joke at all, because before 
we can have a just price in the United States lor the staples of agri- 
culture; the food products for man, woman, and child, and the raw 
material for clothing them, before we can have a just measure for 
ourselves we have got to see that there is a just measure in such out 
of the way places as Odessa and Rosario. You may ask what have 
we to do with Russia or Argentina, and the answer is, before we 
can have a just price in the United States we must see that the 
prices are just in those countries first of all. If they and their products 
are to go to the devil they will pull us right along with them. That 
is the law. If the world's price is pulled down below the normal at 
Rosario or Odessa that will tend to pull our price down, and thus we 
see that we are our brother's keeper, that the world's price in its 
making has the whole world for its range; that it is international; 
and the purpose of the pending resolution is to place the factor of 
ocean carriage so equitable and just as shall provide a rational 
basis for calculation of the price of the staples; so that the man on 
the farm anywhere will be able to take pencil and paper and figure 
out from the data at hand what the world's price is at his port in 
the nation and what it is worth on his farm. 

Waiving for the time being the subjects of the resolution above 
referred to, of the need of Landwirtschaftsrat and of the Landschaft 
system of rural credits, and returning to the project which I am to 
present to you this afternoon, let me first of all hand you the fol- 
lowing paper concerning the project for marketing farm products, 
which I would be pleased to have you read, and I will explain it as 
you go along. 



MARKETING OF FARM PRODUCTS. \) 

Proposal Submitted at a Meeting in the Department of Commerce Friday, 

August 14, 1914. 

marketing food products by the farmers direct to the consumers. 

Wholesale: (a) Sample salesrooms, (b) auction rooms, and (c) exchange, or pit. 

Retail: (a) Salesroom, (6) auction room, exchange or pit, and (c) street market. 

Wholesale: For the larger cities only. Sales in salesrooms, auction, and pits, in 
operation daily- 
Retail: Small towns, at stated times during the week, and at stated hours. 

National and State committee: President chamber of commerce, mayors of the three 
largest. cities in .State, three members of leading department stores, leading carrier, 
parcel-post man, leading banker, leading workingman, president of the county 
council. 

In addition to the above there should be leading farmers, who should compose a 
majority of the entire committee. 

Subcommittees appointed by the above for (a) large cities, (6) counties, who shall 
appoint subcommittees of the above for townships. , 

All under the direction of the national commission and the supervision of the 
United States Department of Agriculture, and the Department of Commerce, who 
shall each provide field agents, so as to instruct and line up. 

This paper that you have just read is part of the project that I am 
submitting to you this afternoon. The president and the people are 
complaining about the undue rise in prices of the products of the farm ; 
for the undue rise in the price of food products. Well, what is the 
remedy? Will it be to argue with buyers and sellers or to penalize 
them ? I do not think that anything can be accomplished in that 
way. There has been a great talk and there is a great talk aU over 
the country that the trusts are responsible for the high prices in the 
cost of food products, for the high cost of living. Well, there is but 
one effective way to fight the trusts, and that is to take the goods that 
are trusted out of their reach ; that is the way to make the trust impos- 
sible, and this is just what I propose under the plan set forth and to 
be still further set forth. The plan, in substance, is this: 

First. Let the President of the United States appoint a national 
committee consisting of (a) the president of a chamber of commerce; 
(b) mayors of three of the largest cities in the Union ; (c) three members 
of the leading mail-order and department stores; (d) a leading railroad 
man; (e) a parcel-post man: (/) a leading banker; (g) a leading work- 
ingman; (h) two Congressmen; (i) a Senator, making 14 in all, and 
in addition to these 14 let the President add 15 farmers from va- 
rious sections of the United States. This committee of 29 to be 
the national committee, who shall meet and organize for the purpose 
of having the food products in the various States in the Union dis- 
tributed under the plan that shall be explained further on. 

Second. Said national committee shall have prescribed power of 
direction of similar committees to be appointed by each of the gover- 
nors in every State of the Union. 

Third. Said State committees shall have the power to appoint 
smaller committees of the same kind for (a) the larger cities in the 
State and for counties, and the county committee shall have the right 
to appoint the township committee. 

The national committee after organization shall devise a plan for 
the delivery and sale of the products, with plans and specifications 
and details of sample rooms, auction rooms, exchanges, pits, and 
street markets, and designate how the products in township, county, 
and State are to be synchronized for shipment, for display, by private 
sale and by auction, the rules for selling and delivery, the terms of 



10 MARKETING OF FARM PRODUCTS. 

sale, and the mode of procedure. The various committees appointed 
are to ask the assistance and cooperation of the press, the carriers, 
the Federal, State, and county officials, the ministers of the various 
religious denominations, the various chambers of commerce and boards 
of trade, the labor leaders, and the farmers everywhere. The Federal 
committee above stated shall send copies of the plans and details and 
specifications and drawings to the various State committees, and the 
State committees, after elaborating and modifying said plans, are to 
send copies of same to the county organization and to the township 
organizations. 

It is assumed that the national committee here proposed, if ap- 
pointed by the President of the United States for, say one year's 
service, would find no trouble to obtain the service of high-grade men 
for at least one year, free of charge to the United States Government. 
It is further assumed that the State, county, and township committees 
would serve that term free of charge. This, in substance, is the plan. 
While it is mor3 clumsy than the plan under the proposed Landwirt- 
schaftsrat it has this merit at the present time; first, we have not yet 
got the Landwirtschaftsrat; second, it would be the most likely means 
of getting it, for no sooner would these committees start out in their 
work than it would become palpably evident that a Landwirtschafts- 
rat system would be a simpler mode of doing the same thing. 

In the European countries there is no such thing as a trust in food 
products; there can not be any so long as the Landwirtschaftsrat is 
there. The farmers in European countries do all the trust business 
themselves, and as a result the farmers are benefited and the con- 
sumer is benefited. Were the trust system of food products carried 
on in Europe as it is in the United States, it would cause a state of 
permanent famine there. 

The Governments of Europe would not tolerate food trusts in their 
country for one moment, and all the penalizing and talking that we 
may do against trusts in the United States will not amount to a "hill 
of beans." The way to fight the trusts is to take the goods away that 
the trust deals in ; so long as the trust can get hold of the hogs, of the 
butter, of the potatoes, and of the chickens, there will be hog trusts, 
butter trusts, potato trusts, and chicken trusts. Let the president 
start these committees; let these committees perform their work 
intelligently and thoroughly and conscientiously and the trust is 
gone and the Landwirtschaftsrat will follow. If we are in earnest 
about this matter let us prove this earnestness by the plan here pro- 
posed. Nor can it be objected to on the score of novelty. The com- 
mittee may be new but the mode of disposing of farm products here 
proposed is not new; it is in operation in almost every country in 
Europe and why should it not be in operation in the United States? 
It should have been in operation here long ago. However, better 
late than never. 

Now, to return to the committee. Assuming that the Government 
got this thing started, and that the proposal was put in working 
order, the Government could then provide a number of field agents 
under the supervision of the United States Department of Agriculture 
and of the Department of Commerce, whose duty it would be to 
instruct the subcommittees. 

So far as the selling is concerned, that end of the work could be 
taken care of all right with men on the national commission like Mr. 



MARKETING OF FARM PRODUCTS. 11 

Wanamaker, Mr. Julius Rosenwald, of Sears, Roebuck & Co., the 
head man of Montgomery Ward, or the head man of Dun or Brad- 
street. With men of this character on the committee we need have 
no fear so far as the selling end of the work will be concerned. 

The weakest spot in the carrying out of this proposal is the long 
reach of the trust. The trusts know that all the laws from here to 
the heavens can not hurt them. There is only one thing that can hurt 
a trust, say an egg trust — take the eggs away from the trust and the 
trust is gone. And so all along the line — take the things away from 
the trust that the trust deals in and you are done with that trust. 

The Assistant Secretary. After you get a committee such as 
that proposed, what would they do ? 

Mr. Lubin. Tluy would proceed to do the things here proposed. 
For instance, the products will be synchronized all along the route of 
the railway and train service will take these products up and dump 
out designated quantities at certain sales places. Each town and 
city will have its auction rooms and almost every hour of the day a 
diffarent hne of produce will be offered for sale. " Then there will be 
the open-air markets; the cities and towns will designate certain 
public squares for that purpose, when twice a week, more or less, and 
for the hours designatad, these public squares are converted into 
a market, with a space designated for each seller, and the rules of 
sale and delivery are to be made public throughout. 

Does this seem new to yoa? Well, let us see. Supposing Mr. 
Armour was to send his manager to Denmark with a commission to 
start an egg trust there, and with a check book with a large amount of 
cash behind it to buy eggs. Where would that manager have to buy 
those eggs in Denmark ? He would have to buy them in the grocery 
stores at retail, for the wholesale end of the egg business in that country 
is in the hands of the farmers themselves, and so with butter, and so 
with chickens, and so with hog products. This is not only so in Den- 
mark, but it is so in Germany, France, in Austria, in Italy, in Belgium, 
in Holland, in all Europe. 

' If we really want to stop the high cost of" living we can do it if we 
want to, but we can never do it by penalizing the trusts; that is 
nonsense. That may be a good way to talk to get votes. The way 
to stop the trusts from fixing prices on goods is to take the goods 
away frcm the trusts, and then they will have nothing to fix prices on. 

Mr. Baldwin. That is the best example I know of of cooperative 
selling. 

Mr. Lubin. Yes, this is cooperative selling and if we are in earnest 
in the matter of doing away with the high cost of living, we can do it. 

Mr. Hampton. Excuse me, these gentlemen may understand you, 
Mr. Lubin, but I confess that I do not. If you simply say go ahead 
with the case you have there, I would not know the first a, b, c of how 
to start. And yet I know from this paper and from your own work, 
and from the splendid work you have done there in California that 
there is a great big thing behind it; but it is behind the curtain so far 
as I am concerned. I do not know whether what I say is true with 
the rest of those here. The Government, I suppose, has got to take 
some action in this case, whether it is done by a bill in Congress and 
how it is done, or whether they have got to make an appropriation. 



12 MARKETING OF FARM PRODUCTS. 

Mr. Lubin. I do not think it requires an appropriation at all. 
If the President appoints this committee and they agree to serve, it 
will not ask for money. 

The Assistant Secretary. Your idea, then, as I understand it, 
is to have this very representative committee or commission ap- 
pointed by the Government some way ? 

Mr. Lubin. Yes, sir; by the President of the United States. 

The Assistant Secretary. And then they become the medium 
through which the producers market their goods on a really cooper- 
ative plan ? 

Mr. Lubin. Yes; there is a measure of cooperation, but the indi- 
vidual farmer, if he so desires, can bring his goods to the salesrooms, 
to the auction rooms, or to the open-air market, and either have them 
sold for him or he can sell them himself. 

The Assistant Secretary. Whether the committee or commission 
do this work for compensation or not, you say that the first members 
would very likely be secured for the glory of it, without pecuniary 
compensation ? 

Mr. Lubin. Yes. 

The Assistant Secretary. But after that, whether you organize 
the Landwirtschaftsrat or whether you continue through the proposed 
committee, there will have to be compensation ? 

Mr. Lubin. Yes; for the Landwirtschaftsrat members receive trav- 
eling expenses, and clerks or porters or sales people, if employed, 
would have to be paid. 

The Assistant Secretary: You could not expect people to give 
their time free of charge indefinitely. But, if I understand it, there 
will be some system by which voluntarily the producers of the 
country would work through this channel. 

Mr. Lubin. Yes. 

The Assistant Secretary. Realizing that in that way they 
could reach the consumer and get a fair price for their commodity, 
and that the consumer would only be paying a fair price ? 

Mr. Lubin. Yes; that is it. 

The Assistant Secretary. You simply cut off all the middle- 
men ? 

Mr. Lubin. Yes; there would be no middlemen at all. There 
would be the producers of their products and employees. 

The Assistant Secretary. Is that the way you understand it, 
Mr. Hampton? 

Mr. Hampton. Yes, sir; that is the way I understand it now. 

The Assistant Secretary. I think, Mr. Hampton, you could 
give us some idea on the subject from your own standpoint. 

Mr. Hampton. Well, this was brought right to me to-day. I 
understand this thing mainly because I have heard the paper that 
Mi. Lubin submitted here before. Eut this municipal marketing 
idea is a thing very attractive to me, and it occurs to me that if we 
endeavor to arrange matters so that the small, ordinary, every-day 
farmer, scattered all through the East, could give an abundant meat 
supply we would have to have free markets and cooperative slaugh- 
terhouses, and thus make the farmer absolutely independent of the 
trust, and my mind has worked along the idea of these independent 
cooperative things that would gradually be coordinated into a regu- 



MARKETING OF FAEM PEODUCTS. 13 

lar, definite, harmonious whole, in which the larger cooperation 
could make itself manifest along these larger lines that Mr. Lubin 
has suggested. 

The Assistant Secretary. In the case of commodities, Mr. 
Lubin, that must undergo some change between the original pro- 
ducer and the final consumer, like meats, for instance; what is your 
plan ? 

Mr. Lubin. The farmers can do all that. That is all done by the 
farmers in Germany, from hogs to ham and bacon and lard, and 
from farmer direct to the consumer. In Denmark, for instance, every 
egg is stamped with the date, etc., and not merely do the farmers 
handle the products in their own market, but the Danish farmers 
handle the products even in London. I would suggest, Mr. Chair- 
man, that ycu question some of the gentlemen who are present. Per- 
haps that will help to bring cut the idea. 

T^he Assistant Secretary. Do you not want to ask some ques- 
tions, gentlemen, with regard to this scheme, or express your opinion ? 
We would be glad to hear what ycu think of it. 

Mr. More. Would this be in competition with the present middle- 
men \ 

Mr. Lubin. Adept the plan here proposed and there will b9 no 
middlemen. 

Mr. More. You are supposed to substitute this at once for the 
present channels ? 

Mr. Lubin. It will not do it the first day, but it will do so gradu- 
ally- In the end it will keep the middleman out completely. 

The Assistant Secretary. What will be your method of getting 
rid of the middleman? Supposing lie wanted to remain in business; 
did not want to be ousted ? 

Mr. Lubin. He could be employed by the farmers. 

The Assistant Secretary. You could not compel him to, unless 
there was some legislation. 

Mr. Lubin. There would be no necessity for any legislation. If 
the middleman could not get the goods which makes him a middle- 
man it would do away with him as middleman for that kind of goods. 
Remove the goods from the reach of the middleman and it settles 
the whole proposition. They haven't got them in Europe, and they 
do not need them here. 

Mr. Hampton. A department storekeeper is a middleman. 

Mr. Lubin. So he is, but he need not suffer through this. The aid 
that he will give to this work will make him sell more neckties, shoes, 
shirts, and hats, and dry goods. 

Mr. Hampton. Then it would be only the food products that this 
would apply to ? 

Mr. Lubin. Yes. 

Mr. Hampton. But is not all this rather a paternalistic idea than a 
democratic one ? 

Mr. Lubin. Why? 

Mr. Hampton. Would it not reduce the farmers simply to sitting back 
in their chairs and seeing some of these big experience men plan and 
do the work for them instead of making it a real cooperative scheme ? 
Here is a scheme in skeleton, which Mr. Wanamaker or Mr. Rosen- 
wald and other big operators are to put in operation and organize 
without any detail of the plan until it has been developed and become 



14 MARKETING OF FARM PRODUCTS. 

knyvvn to the mass of the people, the producers and consumers, the 
producers, realizing that they will be in the hands of beneficent 
people, will come to these exchanges and bring their produce; and, 
naturally, of course, if you establish markets, it does not take long 
for a consumer to realize that he can get those things there cheaper. 
That side of it is a simple problem, but it seems to be a much more 
complex problem to get this thing organized, with the producers 
having their produce flowing into these pits and exchanges that are 
organized almost and I should say, in this phoenix, built-up-in-a- 
night kind of way. 

Mr. Lubin. Well, it seems built up in a night, but in the first place 
you should bear in mind that the majority of this committee are 
farmers. 

Mr. Hampton. Of course, I am interested in the farmers but I have 
never yet been able to see that we can move with lightning speed in 
any such organization. It is one of our greatest struggles to make a 
success of our various cooperative enterprises. 

Mr. Lubin. That is exactly it, and I am glad you brought this 
point up. In the first place, you inferred that these great department 
store merchants on the committee would pretty soon take hold of 
things and swing this poor, innocent, slow-going farmer along, and 
that he would have, willy-nilly, to go along; that he would be the 
tail to the kite. I want to answer that by saying that the farmer 
would not have to be the tail to the kite, because he would be the 
majority of the committee. If, for instance, there were 15 others on 
the committee, one a carrier, one a banker, one a merchant, etc., 
there would all the time be 18 farmers solid. So it could not be that 
the poor farmers would innocently ride into this proposition, for the 
reason that the farmers would be in the majority on the committee. 
Now to answer the other half of your proposition, that the poor 
farmers go slow, etc.: Of course, he is slow. Whoever said that he was 

Suick % He is not in a line of business where he is going to get quick, 
iut these other men, especially the great merchants, they are quick; 
they know how to sell goods; you do not need to teach them how to 
sell. They have got it at the ends of their fingers. Now then, in this 
committee you are uniting the slowest end of the line, the conserva- 
tive, the farmer, with the fellow who knows how to do things quickly; 
when you get a combination of that kind you have got very nearly as 
good a machine as the Landwirtschaftsrat proposition would be, 
and probably for the start, even better. But, of course, this committee 
work could not be carried on free of charge for an indefinite period, 
and to continue a commission of the kind that I speak of under a 
salary would be a very expensive job; but it would not be at all 
necessary, for no sooner would this committee be at work and whip 
the plan in shape than it would be followed soon with a Land- 
wirtschaftsrat. 

_ The Assistant Secretary. Is it your idea to have an organiza- 
tion of that kind in each State ? 

Mr. Lubin. Yes. 

The Assistant Secretary. You would make the State the unit ? 

Mr. Lubin. Yes; the State would be the unit. There would be first 
of all the national commission appointed by the President of the 
United States, and then the State commission, most likely to be ap- 
pointed by the governors of each State; then the State commission 



MARKETING OF FARM PRODUCTS. 15 

would appoint the county commission, and the county commission 
would appoint the township commission. Besides these commissions 
there would be the field agents, the interstate factors, under the 
Department of Commerce and under the Department of Agriculture, 
and perhaps under the Interstate Commerce Commission. 

The Assistant Secretary. How is that done in Germany ? 

Mr. Lubin. It is not done. There, it is the Landwirtschaftsrat 
which begins with township, then county, then State, then Province, 
and then up to the Nation. 

The Assistant Secretary. Yes; but how are the individuals of 
that organization selected ? 

Mr. Lubin. By votes. 

The Assistant Secretary. On the progressive system of repre- 
sentation ? 

Mr. Lubin. Representation, yes; as it is here. 

Mr. More. Do they undertake any of the marketing? 

Mr. Lubin. They do the whole thing. They attend to the farmers' 
business. The national commission of 72 men do what I am proposing 
here that the commission should do. 

Mr. Hampton. Those 72 men in Germany are allowed to do the 
marketing of farm products what the Federal Reserve Board will do 
here with banks ? 

Mr. Lubin. To some extent, yes; only that the Federal Reserve 
Board is an official body, whereas in Germany it is semiofficial. 

Mr. More. Would the national commission you propose take 
California oranges and put them in the New York markets 

Mr. Lubin. No; they would say how this is to be done. The 
commission of 72 men in Germany, the Landwirtschaftsrat, do not 
actually take a lot of eggs in a basket and run to town with them 
and sell them. They simply direct. 

Mr. More. Then you have got to build up a system of middlemen 
under them to take the place of the ones we have now ? 

Mr. Lubin. No; there is no need of that, for the helpers in this 
work are employees; they are not middlemen. This does away with 
the middleman and therefore does away with the trust. 

The Assistant Secretary. How are they compensated, by salary 
or commission ? 

Mr. Lubin. You mean the national commission? 

The Assistant Secretary. No; the men that do the actual work. 

Mr. Lubin. Oh, they are employees and it depends on the by-laws 
of the association or upon contracts made by individuals. 

The Assistant Secretary. Don't you want to ask any questions, 
gentlemen ? It is a good thing to get a very complete understanding 
of this. 

Mr. Lubin. I should like, Mr. Chairman, to ask the gentlemen 
present for any criticism on the matter here presented, as this sub- 
ject is not foreign to their business. 

Mr. Hirsch. Is there an official from the Bureau of Markets of the 
Agricultural Department here ? That seems properly to come under 
their province. 

The Assistant Secretary. There is a representative, is there not ? 

Mr. More. Yes, sir. 

Mr. White. Yes, sir. 



16 MARKETING OF FARM PRODUCTS. 

The Assistant Secretary. Would you bo kind enough to tell us 
how this impresses you ? Perhaps it is not a new thing to you. 

Mr. White. My work of handling the office of markets is along 
transportation lines. 

The Assistant Secretary. Has any plan of this kind been 
brought to your notice before ? 

Mr. White. Not to my knowledge; it may have been discussed in 
other divisions in the office of markets. 

The Assistant Secretary. Does it look practical to you ? 

Mr. White. I do not know that I fully understand it. 

The Assistant Secretary. That is one reason why I wanted to 
have you ask Mr. Lubin questions, if it is not perfectly clear. 

Mr. Lubin. I will be willing to answer any question that I am 
able, if you will ask me. 

Mr. White. Those employees under this body of 72 men (Land- 
wirschaftsrat) that you speak of, are they also producers, or are they 
merely employees of those 72 in handling the machinery of distri- 
bution? 

Mr. Lubin. It would be mainly the employees of the township 
organizations that would do the work. 

Mr. More. Producers' organizations ? 

Mr. Lubin. Producers' organizations, yes; and of individual pro- 
ducers independent of organizations, it would not be necessary for 
a man to be a member of a cooperative organization in order for him 
to be permitted space, say, in the open-air market, in the auction 
room or other sales facilities. The by-laws to provide that such 
individuals receive the same advantages that are given to members 
of cooperative associations. The modes of procedure in each State 
would be designated, the larger body — 

Mr. White (interposing). The State body? 

Mr. Lubin. Yes; the State commission would have the power to 
appoint the county commission and the county commission that of 
the township. Let us sav that the township committee is in session, 
in addition to the national and State regulations which they received; 
they adopt their own special by-laws not in conflict with national 
and State regulations which they have received, and then proceed 
to carry on the business for which they have been appointed. 

Mr. Zimmerman. In other words, the national commission will be 
in the nature of a clearing house ? 

Mr. Lubin. Yes; that is right. 

Mr. Zimmerman. It will take care of the situation where three 
carloads of peaches are sent to a city where there ought to be one, 
and one where there ought to be three. 

Mr. Lubin. Yes; in a measure. While the main work of direction 
will be in the hands of the national commission and the State com- 
missions, the principal labor and carrying on the practical work of 
distribution will be in the hands of the smaller bodies — the county 
and township committees. 

Mr. Zimmerman. It will result in the acme of cooperation — is 
that it ? 

Mr. Lubin. Yes. Without all this organization, and it may take 
25 years before the fanner gets cooperation. With this proposal in 
working order he arrives at cooperation right away. 

Mr. More. If he accepts it ? 



i 



MARKETING OF FARM PRODUCTS. 17 

Mr. Lubin. But he will not be able to help himself by accepting it 
if it will pay him better than under the present conditions. 

Mr. More. It would take a bunch of money to finance it. 

Mr. Lubin. No; it would not. 

Mr. More. For instance, on your New York market. I was there 
one Monday morning recently and on one dock were about 350 car- 
loads unloading and they were sold and hauled away in the course of 
three or four hours. The freight had to be paid on all of that and in 
order to sell it, of course, a great number of salesmen went to a large 
number of jobbers. They took it to their houses, resold it to the 
retailer 

Mr. Lubin. Sold what? 

Mr. More. Cabbages, onions, canteloupes, oranges, potatoes, cu- 
cumbers, lemons, etc. 

Mr. Hampton. Farm products ? 

Mr. More. Farm produce. 

Mr. Lubin. What was it all done by — an organization ? 

Mr. More. No; this was on the Pennsylvania docks in New York 
City. That was merely one morning's receipts on one dock, to feed 
New York City. The freight on that, of course, was a great deal, 
and all the machinery to handle that. 

Mr. Lubin. I do not think there is any need to worry on that score. 
Take it in the instance of California fruits, two train loads are sold in 
a couple of hours and so with ilorida fruits. 

Mr. More. California and Florida fruits are a given quality and 
almost national standards. When you get to vegetables and produce, 
on which the standards are not so established, it makes it more 
difficult. 

Mr. Lubin. Not necessarily. There is no greater difficulty in 
buying or selling potatoes than there is fruits, in fact, not so much. 
You can sell potatoes just as well as you can grapes. 

Mr. Hirsch. Mr. Lubin, who do you think would eventually benefit 
under this system that you propose ? 
. Mr. Lubin. The farmer and the public. 

Mr. White. Under your State organization, the State body would 
control the distribution and the marketing of all the products of the 
State? 

Mr. Lubin. No, no; they would not. 

Mr. White. They would direct it? 

Mr. Lubin. There may be any number of farmers that would say 
"I won't join the union," or "I prefer to sell to the trust." There is 
perfect liberty for every producer and every consume]'. 

Mr. White. That is the question that I was just going to ask. 
Wherein would machinery of that kind and an organization of that 
kind be any more efficient than, for instance, your exchanges of 
to-day in handling the orange crop of California? 

Mr. Lubin. Well, if the orange crop is already being taken care of, 
that settles the matter so far as oranges are concerned. But we want 
to do all this with potatoes, with chickens, with meat products, with 
butter, with eggs, with cheese, and a thousand and one different farm 
products. The handling of California and Florida fruits through the 
exchanges have been brought up. It undoubtedly is a great improve- 
ment over the former system of handling the fruits of California, 

S. Doc. 579, 63-2 2 



18 MARKETING OP FARM PRODUCTS. 

through the Porter Co. and the Earl Co. on the one hand and the 
railroad con pany on the other. These three exerted a decidedly 
deteriorating influence on what is now the primary industry of the 
State of California, and besides that the older system deprived mil- 
lions of people throughout the United States from the privilege of 
enjoying California fruits, and at last Mr. Huntington was convinced 
that that kind of a policy was ruinous to his railway. He became 
convinced that the real integrity of a railroad share was centered in 
the earning power of the farmers on each side of the railway track, 
and the conversion of Mr. Huntington to this idea helped to emanci- 
pate the fruit industry of California from the oppressive thraldom of 
the trusts. 

But yet not altogether so, for the fruit exchanges lacked the cash 
money to carry on their work to the best advantage. Whenever the 
Landschaft system of rural credits will be in operation, when the pro- 
ducers will be able to get money at from 3, 3£, and 4 per cent a year, 
as the farmers in Germany do, then they will be able to handle the 
fruit interest under the exchanges very much better than they can 
to-day. 

Mr. Hirsch. Would the system that you propose work on perish- 
able commodities such as canteloupes and tomatoes ? 

Mr. Lubin. Yes. 

Mr. Hirsch. I know a community down in Delaware where they 
raise a lot of tomatoes. When the tomatoes are first brought to this 
country they bring 25 cents, but there is a rush, and they ripen all 
at once, and then they go down to 8 cents. Those that haven't got 
a contract at 8 cents can't get 6; they can't get a contract at all. 
What are you going to do with those tomatoes, ripening all at the 
same time? 

Mr. Lubin. Please observe, if you could give every tomato and 
cantaloupe a new intelligence when they would begin to talk to the 
farmer they would say to the farmer, "Why, you darn fool, what are 
you sending me to that market for? Don't you know that it is 
glutted ? Have a little horse sense; send me right over there, please; 
there's where I should go." And if the tomato and cantaloupe could 
talk to the railroad they would say, "Why are you backing and for- 
warding to and fro and wasting time for a few stray boxes ? Why 
don't you arrange affairs so that there is no loss of time in having us 
gathered together and put on the train?" 

Mr. Hirsch. I can see that in regard to the melon, but I can not 
in regard to the tomato, because the tomato is canned for the next 
winter season. 

Mr. Lubin. So the producer cans them ? 

Mr. Hirsch. Yes; they have to be canned. You can not use all 
those tomatoes at that time. 

Mr. Lubin. Very good; but there is a market for canned goods as 
well as for uncanned; but, first of all, let us consider what I was 
talking about. If those products could get up and talk horse sense 
to the farmer, and if the farmer would obey the tomatoes, the canta- 
loupes, the carrots, it would then be all right; but as we can not 
expect vegetables to think and to talk, where, then, is the remedy? 
This: That man has got to do the thinking and the talking; that's 
why he is a man. But if a man is too lazy to do that, then he is no 
different fiom the poor Indian, for he is hardly yet civilized; is too 



MARKETING OF FARM PRODUCTS. 19 

stupid, too indolent, and too unintelligent to understand, and so 
other intelligences will have to do thinking for him. For instance, 
President b ipley of the Santa Fe Railway, about four or five months 
ago, devised a system that rebukes every farmer out there, and what 
President F ipley devised should really have been devised by the 
farmers along the road. "Have your things ready and we will come 
along and pick them up for the market, and you will see to the mar- 
keting of them." See the amount of ingenuity, skill, and thought that 
is put into machine and hand labor in the weaving of a yard of cloth, 
the price of which may be less than 10 cents; and if the farmer put the 
same amount of thought in his work, not merely in production, but in 
distribution, would not that ingenuity, skill, and thought pay a 
dividend ? It certainly would, and a large dividend, too. 

But are we to infer from all of this that the farmers in Germany 
and in other European countries are so very much more intelligent 
than are the American farmers? By no means. The European 
farmer is not any more intelligent than the farmer in the United 
States; in fact he is a great deal less intelligent, but it happens to be 
the fashion in European countries for the thinking men to think and 
to devise ways which shall be effective in promoting the best eco- 
nomic interests of the farmers, partly for the farmers' sake and 
partly for the consumers' sake. If the densely populated countries 
of Europe were to permit the food product of those countries to 
drift into the hands of trusts, to be manipulated by trusts, it would 
create a state of perpetual famine and starvation in those European 
countries. It would soon create revolutionary uprisings, and it is, 
perhaps, for this reason that the wisest minds of Europe are guiding 
the farmer along the path he should travel. 

Mr. Hirsch. Don't you think that it is easier to put it in operation 
there on account of the thickly settled communities, with small area 
to be covered, and density of the population ? 

Mr. Lubin. I do not think you have hit the point by this postulate. 

Mr. Hirsch. Possibly not. 

Mr. Lubin. For this reason. The European countries are at the 
same time the most thickly settled and the most thinly settled in 
the world. You have the two kinds. You have the farmer in Euro- 
pean countries, with his quarter and half of an acre or one acre of 
land, and he is quite some sort of a nabob with five acres. But, then, 
you have also got the farmers that have 10,000, 20,000, and 50,000 
acres of land. 

Mr. Hirsch. Oh, yes. I was referring to the population itself, 
where you market the stuff; the density of population in cities. 

Mr. Lubin. You mean the eating — the consuming people ? 

Mr. Hirsch. Yes. 

Mr. Lubin. Surely we have enough of these. There are perhaps no 
consumers in the whole world that afford a better demand than those 
of the United States. 

Mr. Hirsch. But we have got a long distance to carry. 

Mr. Lubin. Why ? 

Mr. Hirsch. Certain fruits and vegetables have to go long distances. 

Mr. Lubin. It seems to me that in reality we have shorter dis- 
tances because we have more railways. And in addition to this 
we are not hampered by tariff restrictions, as they are in Europe. 

Mr. Hirsch. That is what I wanted to find out. 



20 MARKETING OF FAEM PEODUCTS. 

Mr. Lubin. One advantage that they have got which we have not 
got is good roads. We ought to have good roads, but of railways 
I do not think there is any other country in the world that exceeds 
this country in density. 

The Assistant Secretary. Mr. White, did you get a satisfactory 
answer to your question ? 

Mr. White. I do not know that I fully understand the scheme yet. 

Mr. Lubin. What part don't you understand ? 

Mr. White. As I gathered at first, this was to supplant all selling 
organizations that we have in existence, but Mr. Lubin has explained 
that it was not to take the place of any present efficient organization. 

Mr. Lubin. No; it is to be purely voluntary. 

Mr. Hirsch. There are cooperative creameries around the country, 
but all farmers do not belong to them. 

Mr. Lubin. Certainly. The presumption is that the mode here 
proposed would afford real economic advantages. At the present time 
there is no systematic method of synchronizing the products or of 
hours of disposing of them. Hence, and apart from any undue 
profits to the trusts or middlemen, there is a great economic waste 
which the proposed project would obviate. Let us take the economic 
improvements in storekeeping, for instance, of the present day, from 
what it was 50 years ago. Fifty years ago there were lumbering 
wooden shutters to put on the show windows every night. After 
that came the rolling iron shutters, and now there are no shutters 
at all. 

And then take the hours. Some of the stores opened at 6 o'clock 
in the morning and the better class at 7. The closing hour was 
9.30 to 10 o'clock at night, but at the present time stores open at 
8 o'clock and close at 5. In former times the proprietor deemed it 
his duty to teach his sales people how to become skillful liars. At the 
present time the salesman that utters a lie is dismissed in disgrace. 
In former times it took hours of bargaining and beating down, and 
threats to leave the shop, and oftentimes downright insults hi the 
attempt to do buying or selling. But to-day the price is marked 
plainly, and that ends all bickering. And all those things and many 
more in place of ruining the business of storekeeping, has in fact 
built it up so that some of the great retail business houses now do 
business by the million that was in olden times done by the thousand. 
And so with the business of farming. It should improve on the same 
lines, in order to entitle it to the credit of living in the twentieth 
century. If all the economic phases would be introduced into the 
business of farming that would apply to it as was done in store- 
keeping, the farmer would make very much more money than he has 
ever made in the history of his calling, and at the same time work 
his hands perhaps half the time that they work to-day, and at very 
much greater pay, and with very much greater comfort. And is not 
all this worth while trying for? However, once let the advantage be 
made evident and there will be no necessity for argument. 

Mr. Hampton. If I understand your scheme, it is to converge the 
feelings of the consumer and the farmer to the present status of the 
high cost of living; to converge their thoughts toward the proposed 
markets — the open markets — free from present conditions and taking 
the producer, with his unsatisfactory selling prices, and converging 
his thoughts along the lines of cooperation, so as to get larger profits ; 



MARKETING OF FARM PRODUCTS. 21 

and simply, by the O. K., as you may say, of the Government, the su- 
pervision of the Government, be enabled to bring these things together 
to a harmonious system of commerce, selling pits or exchanges, and 
markets to which the consumer can come and buy these things; is 
that it ? 

Mr. Lubin. I want to answer your question, perhaps a little differ- 
ently from what you expect; but I think it will answer it all right. . If 
an attempt were made to realize my proposal by the people, say, of 
Sacramento County, it might take them 10 years before they would 
understand what they were driving at. There would have to be a few 
heroic pioneers there who would about work themselves to death, and 
they would be likely to be gray haired before they could succeed in 
doing something in a couple of villages in that county. But take it in 
the case of the proposed plan — the appointment by the United States 
Government — by the President of the United States — of the national 
commission. The recognized merit of the men appointed, the pub- 
licity that this would engender not merely in Sacramento County 
[hesitating] ; and can you give me any counties in Connecticut ? 

The Assistant Secretary. Litchfield. 

Mr. Lubin. Yes, Litchfield and Sacramento; hi every county, in 
every State, and in every State in the Union, and beyond the border 
into Canada, and the press, and the people, would immediately say, 
"The United States has got a great proposition up. What is up? 
Why, they have something like this." And then Tom, Dick, and 
Harry begin reading, and they say, "I wonder how that is going to 
affect the trust? What do you think, Mary Ann?" He is talking 
to his wife, to his aunt, or to his cousin, or to his neighbors. And 
it can be reasonably expected when this marketing machinery is set 
up it will set the whole country going; it is a new thing; its publicity 
is so widespread and the sympathy for its success is so strong that 
it succeeds with a rush, and it becomes a flow without ebb. And 
were you to try to do all this with a little local committee, by itself 
and for itself, you would have to wait a long time before anything 
that is here thought of would be realized. 

Mr. Hirsch. Who buys the contents of those little markets, the 
consumers ? 

Mr. Lubin. Certainly. 

Mr. Hirsch. What are they going to do with the oversupply ? 
There is bound to be an oversupply. 

Mr. Lubin. Well, if he eats too much he will have to take medicine. 

Mr. Hirsch. Oh, if he eats too much; but if he raises too much 
for the market? 

Mr. Lubin. But, my dear sir, you have got the United States to 
supply. 

Mr. Hirsch. That is it; and then you will have to ship it out; it 
will have to be shipped to some other place. 

Mr. Lubin. Certainly. Here is a consumer that wants breakfast 
and wants 1 cantaloupe, and if you bring him 15 cantaloupes you 
have 14 too many. 

Mr. Hirsch. Exactly; that is what I wanted to bring out. 

Mr. Lubin. But that does not mean that you must bring in 15 
cantaloupes when only 1 is needed. Cooperation will tell when 
and where the 1 cantaloupe is to be brought and when and where 



22 MARKETING OF PAEM PRODUCTS. 

the 15 cantaloupes are to be brought, and you will not have a whole 
bunch lying around doing no good. 

Mr. Hirsch. They are just as good there as on the vines if they 
are ready to bring in. 

Mr. Lubin. In cooperation the 14 cantaloupes will find their way — 
let me give this illustration: In California we have a curious tribe of 
Indians called Flatheads. They are not flattening their heads any 
more, but if you read the Encyclopedia Britannica articles, you will 
find that originally they had a board or stone which they fastened 
on the foreheads of the children, and the child that had the most 
retreating forehead was deemed the prettiest. Now, the women of 
that tribe of Indians have no such things as combs and brushes, and 
so an accumulation of minerals, vegetables, and animals regularly 
occurs in their hair, and when this becomes unbearably troublesome 
they go down to the creek and smear their heads full of what is com- 
monly called "dobee," the kind of earth that they make the adobe 
buildings out of, and when this "dobee" dries it is hard as a stone, 
but when it is wet it is like molasses. After smearing their heads 
with this "dobee," they sit in the sun and by and by it becomes as 
impervious to air as a glazed pot. And so, when they think the 
animals are all dead they go down to the creek again and wash off 
the "dobee" and then they are clean for quite awhile. 

Well, that is about the way that we are marketing our products 
at the present time. Now, the European way of marketing is, as it 
were, to use a comb and brush; all is regulated and with design. 

Mr. Hirsch. What I am trying to bring out is this — that if your 
scheme works it will have to be on a limited number of products. 
You can not take all the products indiscriminately and work this 
thing because you have not the time. You can not find out the 
market for canteloupes because the canteloupes are going to rot the 
next day. Tomatoes are the same way and the other perishable 
staples. 

Mr. Lubin. The same kind of a story was probably told the man 
who first thought of the department-store idea. How will one man 
know how to buy stoves and eyeglasses, and women's hats, and slop 
buckets, and opera cloaks? There is not a product that is worth 
anything but what it has some ultimate market. But how can a 
producer know when, where, and how to find it? And even if he 
could, it would not pay him unless he was accompanied by the 
products of a great many others with the same end in view that he 
has. What is known about these ultimate markets? Little or 
nothing by the farmer. Just a very little by the commission mer- 
chant; a little more yet by the wholesale dealer, and almost all that 
is to be known by the trust. Now, in cooperation, you bring all that 
knowledge together; you coordinate the knowledge of each and every 
one, and presently you know how much, when, and where to send 
that which is perishable and that which is not. Through cooperation 
we have got the best intelligence. If there are 50 producers in the 
cooperation you can get the best knowledge of the 50. Besides that, 
through this you can get the best knowledge of your carrier and the 
best knowledge of the consumer. You, therefore, through coopera- 
tion, have the best knowledge in place of having no knowledge at all. 

Mr. Hirsch. The average city person goes along the country road 
and sees a lot of tomatoes rotting on the vines; also cantaloupes, 



MARKETING OF FARM PRODUCTS. 23 

and he will say, "Why don't you pick them?" The reason that the 
man did not pic*k those is that he did not have enough to take to 
market that day. He just had to let them stay there. 

Mr. Lubin. What does that man know of marketing ? 

Mr. Hirsch. He did not have enough; he could not afford to make 
the trip. 

Mr. Lubin. Supposing he made the trip. What would he have 
known of the market ? 

Mr. Hirsch. He would not know anything. 

Mr. Lubin. As a member of a cooperative body he would have 
known ; but, as it is, what is the market to him ? What is he to the 
market ? He knows nothing. Now, cooperation brings intelligence, 
brings light. Ask the farmer in Europe that stamps the date on 
each egg, "What do you do that for?" "Well," he says, "you can 
see the date on that; you can see how old the egg is." "But, sup- 
posing you lied?" "Oh, we don't dare lie. It would do a great 
injury to the business of Denmark." Or, again, ask him, "Where 
do these go?" And he will be able to tell you every step; but the 
producer that sells to the trust buyer — what would that man know ? 
What would a hundred of them know, what would a thousand of 
them know, what would ten thousand of them know? So far as 
commercial knowledge is concerned, knowledge of the best markets, 
they know little or nothing. Such producers are as those in an in- 
vaded city. They are in the same position as the tobacco growers are 
in the paper that I handed you. These tobacco growers are hemmed 
around by the Dukes, the Lorillards, and the "regie" buyers of 
European Government monopolies. What power have these pro- 
ducers inside that mighty circle? Absolutely none. All that such 
a tobacco producer knows is that he has got to bring his bunches of 
tobacco down to that place and put it on that shelf or this table. 
What then ? That's all. That is his ultimate market. All the other 
knowledge is known to the trust, and the trust pays itself well for 
.that knowledge. Why shouldn't it? There is no sin in running a 
trust. If there is any sin at all, it is in the stupidity of the producer 
that makes the trust possible. 

Let this producer learn to break through this invading ring, the 
encircling ring of the trust, which is choking the life out of him. We 
put out fires by taking away the oxygen. Pen the seller around by a 
few buyers and you choke all commercial knowledge away from him. 
The trust has knowledge; the producer, without cooperation, has 
no knowledge. He can get the knowledge of the trust if he does the 
same thing that the trust is doing, and then there will not be any 
trust; but if we expect that putting something in the papers to the 
effect that some trust men are to behave themselves or they will get 
"penalized"; if we think this kind of tactics is going to straighten 
out the whole proposition, then, of course, we will be greatly mistaken. 
" It is to laugh," said the man in the play, and it does not take a great 
depth of imagination for us to perceive the broad grin on the counte- 
nance of the trust magnate as a result of this threat. Of course, from a 
political point of view, it may do some vote fetching. When Mary 
Ann says to Tom, "See this in the paper, Tom; the Government is 
going to put all them trust fellows in jail. What do you think of 
that ?" But if Tom has got any horse sense he would be likely to say, 
"You and I, Mary Ann, will never live long enough to see any of them 



24 MARKETING OF FARM PRODUCTS. 

trust fellows in jail for charging high prices." And now, Mr. Chair- 
man, I am done with my statement. 

The Assistant Secretary. I would like, Mr. Luhin, to state very 
briefly the impression this has all made on my mind, and have you 
correct me in any misconception I may have. You have alluded to 
your own connection with the fruit industry of California. I take it 
that you want us to regard that as a sort of object lesson in coopera- 
tive selling which, in your opinion, might, with suitable variations, be 
applied to all kinds of food products raised by farmers ? 

Mr. Lubin. No. 

The Assistant Secretary. But the general principle of that 
cooperative selling could be applied, with certain modifications, to 
other farm products ? 

Mr. Lubin. No. I would try to correct that statement by this, 
that the California fruit industry labor was, after all, a crude 
attempt. My proposal here is to copy the much more perfected 
system in operation in Europe. The California fruit proposition is 
still in a crude shape; it has not yet been perfected. 

The Assistant Secretary. I did not mean to be understood as 
saying that you considered that to be ideal, but that a measure of 
cooperation had been secured there that has brought about far better 
results in California than the old system of selling fruits. 

Mr. Lubin. Yes. 

The Assistant Secretary. Or the present system of marketing 
farm products all over the country? 

Mr. Lubin. Yes. 

The Assistant Secretary. Now, in answer to some of the ques- 
tions that have been asked you with regard to the glutting of markets, 
oversupply in some particular localities, and that sort of thing, my 
understanding is that your position is that greater intelligence, a 
more complete knowledge of what is wanted in various localities, 
would be secured through this method of cooperation than is being 
secured under the present system; in fact, that practically no intelli- 
gence is being exercised under the present system. 

Mr. Lubin. That is right; except by the trust. 

The Assistant Secretary. I know; I mean by the producers them- 
selves. 

Mr. Lubin. Yes, by the producers themselves. 

The Assistant Secretary. And that under the system that you 
propose, produce would only be sent, in the main to where they were 
needed. I do not understand you to claim that there might not be 
some comparatively small mistakes, just as the trust right now make 
mistakes. 

Mr. Lubin. Exactly. 

The Assistant Secretary. But that a reasonably high degree of 
intelligence and discrimination would be made in the selection of 
markets. 

Mr. Lubin. Yes. 

The Assistant Secretary. And then with reference to the trust, 
I understand your position to be that practically the producer would 
be his own trust. 

Mr. Lubin. Yes. 

The Assistant Secretary. He would then have a degree of intel- 
ligence and discrimination brought to bear upon the marketing of 



MARKETING OF FARM PRODUCTS. 25 

his produce that the trusts bring to bear upon the marketing of some 
other person's produce; that with the profits of the trust, which is 
now supposed to be unreasonably large, with a very small compen- 
sation — inadequate, most of the farmers think — to the producers, 
and a very exorbitant price from the standpoint of the consumer, 
that he pays for the products, the trust between the two is getting 
rich very fast, and your idea is that both the producer and consumer 
would be greatly benefited by this method. 

Mr. Lubin. Correct. 

The Assistant Secretary. And the producers would come in 
voluntarily, because it would be to their interest to do so ? 

Mr. Lubin. Yes. 

The Assistant Secretary. You are proceeding upon the theory 
that self-interest is the strongest motive power that you can apply ? 

Mr. Lubin. That is right. 

The Assistant Secretary. And that both the producer and the 
purchaser would have a strong self-interest in this arrangement and 
that that would practically secure an almost universal adoption of 
this method when it was thoroughly understood and put in practice, 
because it would pay them both to do it that way rather than through 
the methods that are now in vogue. Is not that true ? 

Mr. Lubin. I want to state, Mr. Chairman, that if I had your power 
of expression I would have made greater headway that I have. A 
great deal of my poking around in trying to make this matter clear 
to this meeting is because while I feel this question very keenly and 
clearly, you seem to be able to set it forth very plainly. You are now 
explaining what I am trying to get at. Now we can understand what 
is before us. I wish you could continue in just the same way. 

The Assistant Secretary. I don't know what you want of me, 
Mr. Lubin. [Laughter.] 

Mr. Lubin. I want you to say what I wanted to say. 

The Assistant Secretary. It is perfectly evident that you are 
after something. 

Mr. Lubin. Certainly I was after something. I came here to ex- 
plain; I thought I did explain, but nobody seemed to understand 
what I said except you. It therefore seems that you can make what 
I want to say clearer to those present than I can and I consider that 
a rare gift. 

The Assistant Secretary. Well, I am trying to tell you the 
impression it made upon me, because it was a new subject, and, in 
fact, I must confe s my ignorance in which this is being done in 
Europe. You have been studying it, and I am very glad, indeed, 
to learn about it. I suppose that there are opportunities for read- 
ing about it and studying it, but it certainly has not fallen to my 
lot to run across any description until I listened to yours; and I 
dare say that I absorb more by this kind of conversation with a 
person who has been right there and witnessed it than I would from 
reading about it. 

I do not see, gentlemen, anything ab.-urd or impracticable about 
that, do you? Don't you think it could be worked out? 

Mr. Hirsch. There would be a world of detail to be taken up. 

The Assistant Secretary. We have a^ked Mr. Lubin a lot of 
questions that he has not answered to our entire satisfaction in con- 
nection with these details; but the real point, as I understand it, is 



26 MAEKETING OF FARM PRODUCTS. 

this : That if we understand the general principle, and we are work- 
ing toward a particular end, and bring to bear upon these questions 
of detail our own intelligence, we will work out a plan. 

It may not be exactly the plan that he has in his mind, or that 
is in vogue in Europe. It may be that conditions here would de- 
mand some changes in these plans; that the disposition of our people 
is such that something different would be required; but that is for 
us to figure out, so far as the details are concerned. Is not that your 
idea, Mr. Lubin? You do not pretend to tell us just how every 
little part of this ought to be done; your idea is just to give the 
general plan and have us work out the details ? 

Mr. Lubin. Yes; in fact, I have the details of the cooperative 
institutions here, if you want to use them, and as for the questions 
I have not answered, I will be pleased to have them restated, just 
what those questions were. 

The Assistant Secretary. Is it not possible that some of them 
would not apply in this country? 

Mr. Lubin. Yes; perhaps some. 

The Assistant Secretary. You might need material variations 
from that plan. 

Mr. Lubin. The heart of the question is this, Which could do the 
work more intelligently, the farmer or the trust, the individual farmer 
who handles some miscellaneous farm products which he produces 
or the trust that handles thousands and hundreds of thousands and 
millions of dollars' worth of these products ? Who is the better mer- 
chant of the two, the farmer who operates 40 acres of land or the 
trust man? Which do you think is the better business man of the 
two ? 

The Assistant Secretary. I should say that if you would examine 
their respective bank accounts that would answer the question 
correctly. 

Mr. Lubin. Well, which? Which of the two is the better business 
man? 

The Assistant Secretary. I should say that the man who is 
manipulating the trust, purely from the business standpoint; the 
one who shows ability. 

Mr. Lubin. Yes; you are right; there is no question about it; 
there is no comparison. 

The Assistant Secretary. He is the one who also makes the 
money. 

Mr. Lubin. Of course he does; but now let us go one step further. 
Which is the more intelligent ? The trust man in the United States 
or the cooperation in Europe? Let us say the Danish cooperation 
that handles the butter and eggs. 

The Assistant Secretary. Possibly there might not be any very 
great difference. I do not know. 

Mr. Lubin. Well, right here you must give credit to the Danish 
organization, rather than to the trust, for this reason: The trust has 
much more intelligence than the common, ordinary farmer has here — 
the unorganized farmer. His intelligence is limited, however, to the 
information that he receives from the heads of his department that 
he comes in contact with and the merchants that he comes in contact 
with. But with the European trust which, in fact, is the farmers' 
trust, if there be 500 farmers in that group you have got the intelli- 



MARKETING OF FARM PRODUCTS. 27 

gence of every one of those 500 farmers bunched into one organiza- 
tion, and you have got a better, clearer intelligence than the trust 
has. Though the trust man may be a sharper man himself, as an 
individual, yet collectively the little bit of information that this 
clumsy, slow farmer can give here, and another little bit of informa- 
tion there, and when all this is accumulated together, it makes a 
coherent working intelligence that is much keener than the trust has 
here. So you have the highest intelligence in the German coopera- 
tion or in the Danish cooperation, on the one hand, and the next 
highest, the trust in the United States, and finally the poorest com- 
mercial intelligence at all, the unorganized American farmer, and if 
we follow the path that logic would lead us, we are compelled to come 
to the conclusion that with organization the American farmer will 
lead, as the most intelligent, economic entity in all the world. 

The Assistant Secretary. Now, Mr. Lubin, I would like to ask 
you a question which I think is very practical. What should this 
department do — or any department of the Government — to bring 
about this better condition? What practical steps do you think 
ought to be taken? 

Mr. Lubin. Well, I would suggest the following: The statements 
of the President have gone forward to the people of the United States. 
I refer to the statements on the high cost of living. It is a sober 
statement and is likely to arrest the attention of sober people of this 
country. The statement of the President has created curiosity; the 
curiosity of the farmer, the curiosity of the trust, and the curiosity 
of the people everywhere. The question is pertinent enough, but 
what will it all amount to ? Of course, it will wake up the poor, rich 
trust men ; they will rub their eyes and say, "What is the matter with 
the President, what is he up to," and some of the trust fellows will 
give the President the old cry that used to be given for Hanna "What's 
the matter with Hanna?" "Oh, he's all right," and some of the 
other trust men will begin to feel a little uneasy. Is there going to be 
a fight? Oh, no; for if this proposal is adopted there is to be no 
fight with the trust at all. For in short order there won't be any 
trust, for the farmer is going to take this trust job himself and report 
promptly at the "old stand," all ready for business. 

The Assistant Secretary. You have explained very clearly how 
interest might be stirred up, but I do not quite understand the differ- 
ent steps to be taken before making any announcement to the public. 
Is it your idea that the department should get into communication 
with the people who are to compose the commission ? 

Mr. Lubin. Perhaps, yes. But you understand that the com- 
mission in accordance with the proposal is to be appointed by the 
President of the United States. 

The Assistant Secretary. And that we should select them ? 

Mr. Lubin. There can be no objection to that, but of course the 
appointment of the commission is to be done by the President of the 
United States. 

The Assistant Secretary. Well, at present there is no authority 
to do anything along this line, and it would be entirely outside of any 
direct legislation. 

Mr. Lubin. I hardly think there is any need for any direct legisla- 
tion. A joint resolution of Congress could be passed, authorizing the 
President to make the appointments, and I feel sure that were such a 



28 MARKETING OP FARM PRODUCTS. 

resolution offered to Congress that they would push everything aside 
and most likely pass a resolution within 24 or 48 hours. It would 
seem to me that such a resolution would give the President all the 
power necessary. 

But, from what we read in the papers, it would seem that even a 
resolution would be unnecessary, for it was either the President or 
somebody in the House who said, "We must take the law into our own 
hands. We have got to do it." If I am not mistaken that was 
given out by your chief, the Secretary. And so earnest was he in his 
statement that though staid and dignified as he is, you may remem- 
ber, he used a swear word in that connection. So one way or another 
I think the President of the United States can have all the authority 
necessary for the appointment of a national commission. 

The Assistant Secretary. So far as the Department of Com- 
merce is concerned, how do we reach out into the various States? 
Or is it your idea that we should restrict our efforts to some particular 
part of the country? 

Mr. Lubin. This proposal should be made operative throughout 
the United States, but in a manner to avoid any clash between the 
national authority and the State authority. 

The Assistant Secretary. That is a very important matter. 

Mr. Lubin. It would seem to me that if this matter were taken up 
seriously a way would be found to avoid all clashing of authority. 

The Assistant Secretary. That is the point. 

Mr. Lubin. The President and his advisors, of course, know the 
law much better than I do. The points we are here raising do not 
come up under the German system. 

The Assistant Secretary. No; they have not the same organiza- 
tion in the lower units that we have. 

Mr. Lubin. The question we are here considering would, of course, 
not come under the landwirschaftsrat, but as the proposal is but a 
temporary substitute for the Landwirtschaftsrat, anticipating it, there 
should be no great difficulty in adjusting this point in a satisfactory 
manner. 

Before dismissing this phase of the question it would probably 
not be deemed out of order to consider just how much of the organizing 
labors of this project is to be turned over by the President to the 
Department of Commerce, and how much of it to the Department of 
Agriculture. I presume the commercial end of the question would 
probably go to the Department of Commerce. 

The Assistant Secretary. Yes. Now, that is one of the points 
that the Department of Agriculture has given a great deal of 
attention to, has it not, Mr. White ? Is not that regarded as within 
their functions, rather than ours ? 

Mr. White. The entire office of markets is devoted to that question. 

Mr. Lubin. Then, it ought to come under that. 

Mr. White. And one of its activities is along the line of cooperative 
organization for marketing and distributing products. 

Mr. Lubin. Well, why did the President in his talk point to the 
Department of Commerce, seemingly referring this question of the 
high cost of living to this department ? Did you read the article ? 

Mr. White. I saw the article; yes. 

The Assistant Secretary. The Secretary of this department, in 
his letter to the Attorney General, I am quite certain, referred to the 



MARKETING OF FARM PRODUCTS. 29 

Department of Agriculture as being perhaps the proper one to make 
that investigation, but at the same time he offered to do anything 
that we could do from this department. We have agents now in 
seven different large cities, and we have communicated with them 
and asked them to state to us as soon as possible the conditions exist- 
ing in those cities, and the causes for those conditions, merely as they 
are able to ascertain them, with a view of adding to our stock of 
information and giving us something to work on. 

But, of course, we do not split hairs with regard to what particular 
part of the Government should take up useful work of this kind. If 
it is useful, we want to do it; and especially between Agriculture and 
Commerce. We have a committee that is made up from both 
departments, that is making a great effort to arrange our work so 
that neither department will duplicate the work of the other, so that 
whatever is planned by one department will be understood by the 
otKer, and one department can take advantage of the work being 
done by the other. That, I think, is something that ought to be 
carried out more generally through all the departments than it is; 
I think a great deal of money would be saved. Don't you think so, 
Mr. White ? 

Mr. White. Undoubtedly. 

The Assistant Secretary. And I think that will be done some 
day. But the point I was trying to get at was net so much as to 
whether the Department of Commerce or the Department of Agri- 
culture should take this up, but as tc what practical steps should be 
taken by any department of the Government to bring this matter 
before the people of the country so that it would be generally taken 
up and put through in a good, practical way, and so that they could 
get benefits from it. 

Mr. Lubin. Well, I would suggest that the very first thing that 
could be taken up is, that the Secretaries should meet with yourself 
and seme representative cf the Department of Agriculture and go 
over what is in that paper, and in this presentation, and come to 
some tentative conclusions en the subject, and then present those 
conclusions to the President. 

The Assistant Secretary. Mr. Hampton, is there a prejudice 
among the farmers in Pennsylvania, as far as you know, against the 
cooperative system ? 

Mr. Hampton. No; there is a decided feeling strongly in favor of it. 
The Assistant Secretary. Have not many of them been failures ? 
Mr. More. Thousands. 

Mr. Hampton. Oh, yes, but these failures were largely caused by 
defective or ineffective modes of procedure. The cooperative develop- 
ment, even in Pennsylvania, is much more widespread than people 
know who have not studied it. Of course, the gentlemen in the 
department can tell more about it, because when we come to gather 
our figures we go to these central bureaus for our information. But 
you know that up to the present time cooperative buying in the 
granges is more highly developed than cooperative selling. But this 
proposal, if properly placed before the people, will unquestionably 
develop cooperative selling as it has never been developed before. 
The Assistant Secretary. I suppose so. 

Mr. Hampton. And the cooperative selling is engaging their atten- 
tion at the present time, and the farmers are watching the depart- 



30 MARKETING OF FARM PRODUCTS. 

ment in its Bureau of Markets, not bothering them very much, but 
watching them with a good deal of interest; somewhat with a micro- 
scope and somewhat with a telescope. 

Mr. Lubin. Mr. Chairman and gentlemen, before this session is 
closed I wish to add the following observation : 

Substantially the matter stands thus: Let us say that it is a ques- 
tion of the economic distribution of potatoes, chickens, eggs, butter, 
meats, cheese, vegetables, fruits— in a word, food products, or even 
more, farm products. Who can do this to the best advantage of the 
farmer and the consumer ? Is it the farmer or is it the trust ? There 
is no question in my mind, and I think I am justified in saying nor is 
there any question in your mind, that under present conditions the 
trust can do this very much better than the farmer. Why ? Because 
the trust is a highly skilled and powerful organization, whereas the 
farmers are a number of heterogeneous units, unskilled in the art of 
business. But all this will be changed when once the farmers are 
intelligently and effectively organized. When this will be done the 
farmer will then become a far more effective, economic factor than the 
trust has been, is, or can be. 

It must necessarily follow that an economic movement of this kind, 
if promoted along rational lines, would soon manifest its utility. It 
would then not merely serve a transient purpose, but become per- 
manent. 

And this permanency would not merely prove of value as an eco- 
nomic factor; it would also prove of the highest value in strengthening 
the life of the Nation, and thus become an integral part in the political 
life of this Nation. 

It must also be borne in mind that the justness of cooperative 
movement would strengthen the political life of this Nation; the per- 
sistence of the trust must tend to weaken it. What has just been 
said is true or it is false. If it is false there is an end to the matter, 
but how is it if it is true ? Can we afford to fold our arms and pas- 
sively permit the onward march of the deteriorating factors which 
must sap the life and vigor of this Republic ? 

If the trust is to persist in spite of the fact that what has here been 
said is well known, then it will persist because evil influences are 
already so strongly intrenched in our midst as to make their eradi- 
cation impossible. If that were the case it would be a great misfor- 
tune, a misfortune not alone to this Republic, but a misfortune to 
the world, for as this Republic progresses onward it forces the world 
onward; as it retreats from the light, so the shades of darkness thicken, 
not merely here, but throughout the world. 

Like the Romans in the time of Augustus Caesar, we point with 
pride to the splendid progress that we have made, and in all depart- 
ments that go to make up the sum total of civilization. And last, 
but by no means least, we point, like the Romans of old, to our splen- 
did cities. We boast of our marble palaces, of our skyscrapers, and 
their luxurious furnishings, and we forget that when Rome seemed 
to blaze with splendor, when she seemed strong and beautiful and 
mighty, that she had then been "weighed in the balance and found 
wanting." And so Rome perished. And what killed Rome (and the 
lesson is a solemn warning) ? It was the trusts that killed Rome; it 
was the trust that choked the life out of her independent landowning 
farmer, that drove him from his farm a dependent beggar to Rome. 



MARKETING OF FARM PRODUCTS. 31 

And how does the matter stand in this Republic in this twentieth 
century, in this year 1914? We find in the United States Census 
record that 37 per cent of all the farming lands in these United States 
are now worked by renters; that 16 per cent of those renters were 
evolved during the past 10 years. A few more such decades, a few 
more 16 per cent renters added to the present renters, and this mighty 
Republic will have perished. 

And if there be truth in what is herein set forth — and who can say 
that it is not the truth — it must necessarily follow that the life and 
perpetuity of this Republic is dependent primarily upon obedience 
to the law, "A just weight and a just measure shall ye have." While 
the flag is merely a symbol, the "just weight and the just measure" 
is a reality. And how feeble do our modern economists appear when 
measured alongside of those mighty heroes, the prophets of the 
Bible. The summary of all their preaching was ''the just weight 
and the just measure." In obedience to this sacred injunction we 
are promised, "Thy will be done on earth as it is in heaven." 

Is it then a small matter, thi^, the upbuilding of the cooperative 
institutions throughout the United States- — institutions which shall 
replace inequity in exchange by equity? And is this a question 
which concerns merely the farmers of the land? Does it not con- 
cern all the people, and in every State in the Union ? 

The Assistant Secretary. I think all of us are very much obliged 
to Mr. Lubin for giving us such good ideas. 



OBSERVATIONS AND COMMENTS CONCERNING THE MODE 
OF MARKETING TOBACCO. 

THE RESTRICTED LOCAL MARKET VERSUS EXTENDED OPEN MARKETS. 

Commenting on the points dealt with in my letter to Dr. True, 
chairman of the committee on the International Institute of Agri- 
culture, United States Department of Agriculture, on the tobacco 
question of March 27, the thought has occurred to me that there is 
room for questioning the wisdom of the request made by the Farm- 
ers' Union that purchases of tobacco be made direct of the union. 
Even supposing that the Italian "regie" monopoly and the other 
"regie" buyers and the trust buyers were to comply with this re- 
quest, would not the proposed remedy be still likely to prove of 
questionable utility? I think so; I think it can be shown that it 
would be contrary to sound business principles. 

It seems to me that the union's proposal is in line with the views 
of a certain class of theorists who recommend (a) that the distribu- 
tion of products should be made by placing the buyer in direct con- 
tact with the producer; and (b) that this buyer should seek out the 
product on the farm where it is grown. This, they claim, would be 
calculated to secure the best economic results to buyer and seller. 

Let us now see if this hypothesis be a correct one. 

An example of this mode of distribution is afforded by the history 
of the California fruit industry In the early history of that in- 
dustry various ventures proved that certain high-priced fruits 
grew abundantly in many sections of California. As a result there 



32 MARKETING OP FARM PRODUCTS. 

sprang up throughout the State many orchards and vineyards. 
Right from the start, and so long as the quantity product d was 
within the demand of the home market, the growers found their 
business highly profitable. This gave an impetus to the expansion 
of this industry on a large scale. And then the trouble b;gan. On 
the one hand the product multiplied on a great scale, but, on the 
other hand, no provision was made for its distribution outside of the 
State, oth^r than through a few shippers and a few local canners, 
who bought up the fruit direct from the farmer and sold it on the 
eastern markets. This mode surely placed the buyer in direct con- 
tact with the producer by bringing him to the farm where the product 
was grown. It was doing for the fruits of California just what the 
tobacco planters of the Southern States ar^ still doing with their 
tobacco. But what was the r:sult? It was bad in every way so 
far as the grower was concerned. It gave the two large buyers, 
the Portr Bros, and the Earle Co., a practical monopoly in fixing 
the price of the fruits in California, and as a result the fruit growers 
were face to face with bankruptcy and ruin. 

At this juncture the growers were fortunately aided by the advice 
and energy of men familiar with the laws of trade. As a residt there 
was a change of base in the disposition of the product; instead of 
being sold on the farm to a few big buyers, the fruits of California 
were sent by the growers themselves to the East and West, and were 
disposed of on the growers' account at auction in the primipal cities 
of the Union. As a result of this new method of distribution, it 
became easier to sell two trainloads of fruit in a day in New York, 
for instanee, than it used to be to sell one carload under the trust 
regime. This newer system of distribution largely freed the Cali- 
fornia growers from the deadly coils of the all-em m ling trust. 

Thus we see that the system which places the buyer in direct con- 
tact with the pr xlucer by bringing him to the farm where the product 
is grown, is not conducive to the economic welfare of the farmer. 
On the contrary, under this system the farmer becomes, as it were, the 
"under dog," the hungry clog tussling with a bare, gristly bone. 

In fact, the close approach of a few large buyers surrounding the 
district producing the crops which they wish to purchase, may be 
compared to the besieging of a city by an invading force of irresistible 
power. Closer and closer these few buyers hem in the farmer in the 
producing district, until finally closing up the ranks, they stifle all 
sound commercial practices and instincts in the seller. And thus 
those few buyers succeed in substantially voting over to themselves, 
at their own price, the products of the seller. 

If we ever have a scientific analysis of the causes which have led to 
the formation of the trusts in the United States, it will surely be 
found that one of the main causes is the seemingly harmless system 
which places the few large buyers in direct contact with the pro- 
ducers by bringing them to the farm to purchase the product where 
it is grown. This system enables these few buyers to surround the 
many sellers and hem them in completely, thus using them as a 
property peculiarly their own, to have and to hold and to keep. 

And now to go back to the tobacco situation. We see, in the first 
place, some half-dozen "regie" buyers and a few home trust buyers 
surrounding the growers in the producing district as a solid unit, the 
unit of the monopolist buyer, dictating the price, terms, and condi- 



MARKETING OF FARM PRODUCTS. 33 

tions. The price, terms, and conditions for what? For the product 
of the southern tobacco planter; for American tobacco. And what 
is this product that is thus being foot-balled in a one-sided game by 
a few buyers ? What, then, is this American tobacco ? 

From the point of view of commerce American tobacco is at once 
a staple, a luxury, and a necessity. It is a product in constant 
demand all over the world; a product almost exclusively produced 
within the boundaries of the Southern States. In other words, the 
crop raised by the American tobacco planter is, substantially, a 
monopoly. Do the American tobacco growers realize this ? 

Is there any reason why half a dozen monopoly buyers should sur- 
round the tobacco-growing district, dictating their prices, terms, and 
conditions for this product, when the southern tobacco planters 
may have the markets of the whole world opened to them ? 

Is there not a way whereby these planters may break through 
the cordon of monopolistic buyers who now surround them and reach 
out to the large body of ultimate purchasers ? There surely is a way, 
for as his tobacco is at once a staple, a luxury, and a necessity, in 
constant demand all over the world, it becomes practicable for the 
planter to build up a series of selling zones for the marketing of his 
product. Beginning with the first of these outward zones, which 
should be some distance removed from the producing district, let the 
planter designate selling centers within that zone, and determine the 
quantity of tobacco to be offered hi each center. Then, extending 
outward, let him establish another selling zone, and so on, until the 
entire Union is thus covered. 

And right here it would seem to me that the American farmer 
would do well to cease from shouting at the "pit" and "exchange." 
The question is, do not these "pits" and "exchanges" deserve to be 
studied seriously by him? Is it not high time that there be a little 
solid thinking on what they mean and on what function they perform 
in the equities of exchange ? 

That abuses sometimes creep into the "wheat pits" and "cotton 
exchanges" may be freely admitted, but abuses sometimes creep even 
into church. Shall we for that reason abolish the church ? Upon a 
right understanding it will be seen that in place of crying down the 
"pits" and "exchanges," they should in reality be multiplied until 
every fan-sized town in the Union has its "pit," its "exchange" — 
and above all, mind you, a "pit," an "exchange," which should be 
run by the American farmers themselves through their cooperative 
unions. These "pits" and "exchanges" should not alone cover a 
series of zones embracing the entire United States, but the producers, 
through their cooperative unions, should also operate branches in the 
principal market centers in foreign countries. This, then, would be 
the effective way of placing the farm, the factory, and the consumer 
in direct contact, and without the intervention of trust or monopolist. 

And here we may expect the "regie" buyers to step in with the 
remark: "You seem to overlook the fact that each of the countries 
having a Government tobacco monopoly has but one buyer. Of what 
use, then, would the multiplication of the proposed selling zones be 
to you, since the American tobacco grower could not directly nor 
indirectly land a single pound of his tobacco in a tobacco monopoly 
country unless it be bought by this one Government buyer? And 
S. Doc. 579, 63-2 3 



34 MARKETING OF FARM PRODUCTS. 

if you should hamper this buyer by attempting to dictate to him 
just what he should do, how he should buy, would you not thereby 
interfere with his buying? What then would you do with the 
consequent surplus of tobacco on your hands? Would not this 
increased surplus tend to reduce the growers' price still lower than 
what it is now?" 

To which we may reply as follows: By placing his tobacco for 
sale in the open market in the various selling zones, as above indicated, 
the planter would by no means hinder the free and equitable distri- 
bution of this product. Nor need there be any fear on the part of 
the planter of airy congestion of the tobacco in these zones, because 
the necessity the buyers are .under of having the tobacco is sufficient 
spur to make them buy. Take it in the case of the " regie." While 
it is true that the American grower is not permitted to export his 
tobacco direct to a Government tobacco monopoly country, it is also 
true that this tobacco must be had by the Governments in question. 
And the "must" is imperative for the following reasons: 

First. Because the tobacco monopoly forms an important part of 
the fiscal system of these Governments, and any decrease or cessa- 
tion in the purchase of the tobacco would seriously interfere with their 
fiscal policy; 

Second. These Governments employ a large number of people in 
the manufacture of this tobacco whom it would be quite inconvenient 
and irksome to dismiss on account of any shortage in the supply; 

Third. There is the large body of selling agents, the retail tobacco 
dealers, throughout the countries who would be seriously hampered 
and injured by any decrease in their supplies; and 

Fourth. There is the constant and imperative demand for these 
tobaccos by the people. 

All who use tobacco, whether peasants, laborers, mechanics, pro- 
fessional men, or men of leisure, expect to find the supplies they are 
accustomed to in the Government agency shops, which are the only 
ones permitted to sell tobacco in the monopoly countries. Let them 
go there and be told that there are no supplies and no substitutes, 
and there will be currents and eddies of protest which would pres- 
ently become deep and loud and ominous. Weigh it, measure it, 
analyze it, and there can be but one conclusion with regard to the 
situation. It is not the buyer who, in reality, has the monopolistic 
advantage. It is the seller who, in fact, has a monopoly. For, in 
this instance, the seller has a product which all the world wants 
and wants almost all the time, and which can not be got elsewhere. 
He has a product which the "regie " must get in order to be a "regie." 
It is only a question as to how and when and where the selling is 
done. 

Once make it necessary for the "regie" buyer to run around from 
State to State, from market to market, for his tobacco, once make it 
necessary for him to purchase a little here and a little there, and a 
little everywhere, and he will no longer be able to buy American 
tobacco below the cost of production. He will then have to pay the 
equitable market rate, in full accord with the law of supply and 
demand. 

And now the question arises: How may the American tobacco 
grower set in motion the machinery required for a change in his 
marketing system along the lines of the proposed outward selling 



MARKETING OF FARM PRODUCTS. 35 

zones, with "pits" and "exchanges" which should embrace all the 
important trading centers within the domain of the United States ? 
Is there a way to do this ? 

I believe there is. Let the American tobacco-growers' organization 
join hands with the other agricultural organizations in the United 
States for the appointment of a national committee. Let this com- 
mittee, in conjunction with the United States Department of Agri- 
culture, make a careful and intelligent study of the German Land- 
wirtschaftsrat system, with a view to its adaptation and adoption in the 
United States. This would give the American farmer what the 
farmers of Germany have — a national council of agriculture, semi- 
official in character, with power of initiative on economic lines. 
When once this national council of agriculture, this American adapta- 
tion of the landwirtschaftsrat, would be established, it would afford 
a basis for economic development. It would, in the first place, 
afford the American farmer an opportunity to evo^e a system of 
rural credit suited to his needs, a system like that of the German 
landschaft (see pp. 351-361 and 381-389 of S. Doc. No. 214), which 
could be made to provide him with money on long-time mortgages at 
approximately the same rate of interest paid on Government bonds. 
Through this national council the farmer would be able to ward off 
any mere bankers' schemes of rural credit, such as those now pending 
in Congress and in State legislatures. The farmers would then learn 
that they can get money without going anywhere near bankers and 
without themselves becoming bankers; that they can get it the same 
as the farmer does in Germany under the landschaft system. Witd 
this money the American farmers need no longer be subject to the 
trust; they could then become the great American trust themselves, 
just as the German farmers are hi Germany and the Danish farmers in 
Denmark. With this money the farmers could then open their own 
"pits" and "exchanges" in the various parts of the United States. 
In fact under the proposed national council of agriculture the farmers 
of America would have three temples. The first would be their 
church, the second would be their cooperative union hall, and the 
third would be their "pit," their "exchange." 

In these "pits" and ''exchanges," run by the farmers' cooperative 
unions under the auspices of the national council of agriculture, all 
the different kinds of farm produce could be put on sale at different 
hours in the day or week. There would be a time for the sale of 
potatoes and other root crops; a time for that of fruits; a time for 
tobaccos; a time for cereals; a time for cotton, wool, flax, and hides; 
a time for dairy products and forage; a time for live stock and 
poultry. Thus every hour in the day these "pits" and "exchanges" 
would be to the agricultural interests of America what the heart is to 
the human body. 

And now, finally, it should be understood that the tobacco question 
is not an isolated case; that the complaint of the tobacco planter is 
the complaint of the American farmer; that he is the "under dog" 
lying prostrate under the heel of the trust. 

The European farmer has succeeded in kicking this trust aside 
once and for all, as the American farmer can see if he will but patiently 
read through the important features hi the 916-page book of evidence 
gathered by the American commission and printed by Congress (S. 
Doc. No. 214) . And here let it be said that whatever opinion may be 



36 



MARKETING OP FARM PRODUCTS. 



entertained as to the value of the commission, this should not be 
allowed to bias judgment as to the value of this book, which, it 
should be remembered, consists in the main of statements by authori- 
tative experts given under Government auspices in the countries 
visited. 

A careful reading of this book will show the American farmer that 
he has come to the parting of the ways; that he must either remain 
where he is and be eaten up by the trusts, or go ahead on progressive 
economic lines as the European farmer has done, and by pushing 
aside the buying trusts take his rightful place as the selling trusts 
for the distribution of his own products. 

The difficulties the American tobacco planter labors under are 
substantially the difficulties inherent to the lack of organization for 
ec momic purposes of the American farmers generally. The American 
farmer has yet to learn that he is living in an age of industrial coop- 
eration, a lesson which has been learned and applied by labor, by 
commerce, by finance; a lesson which has especially been mastered 
by the farmers of Europe. Like the ostrich, the American farmer 
hides his face from the light and says there is no cooperation. It is 
high time that he gathered himself together; it is high time that he 
realizes that it is just as futile for him to remain outside the influences 
which govern his age as it would be for him to vote himself outside of 
the influences of the law of gravitation. 

The remedy that will apply to the American tobacco planters' dif- 
ficulties will apply substantially to the American farmers as a whcle. 
This remedy consists, first of all, in the adaptation and adoption of 
the German Landwirtschaftsrat in the United States in the establish- 
ment of a national council of agriculture. Let the American tobacco 
planter work for the national council of agriculture, and, when once 
this is established, the other ossentials will necessarily follow in due 
course. This and this only will free American agriculture once and 
for all from its servitude to the now omnipotent buying trusts. 

David Lubin, 
Delegate of the United States, 
International Institute of Agriculture, Rome, Italy. 

March 27, 1914. 

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